Can CPAs Solve the Savings Crisis?

CPAs are perfectly positioned to advance financial literacy and planning. By Derrick Lilly | Fall 2017

“Folks want to save, know they should, but they are overwhelmed by convoluted options, complex tools, and financial jilting-jargon. How can we fix this?” – Ken Fisher

Country Financial has new data showing just how financially strapped our compatriots are: Almost one in five Americans (19 percent) wouldn’t be able to pay their bills within one month of losing their jobs and that figure jumps to 37 percent for those earning less than $30,000 per year.

Exacerbating the situation, Bankrate.com found that 24 percent of Americans have no savings set aside in case of emergency and 60 percent wouldn’t be able to cover an unexpected $500 expense. What’s interesting about America’s savings crisis is that it spans the population. Last year, a Federal Reserve study on the economic wellbeing of U.S. households found that spending equaled or exceeded annual income for individuals earning less than $40,000 (69 percent), $40,000 to $100,000 (44 percent), and more than $100,000 (32 percent). It’s no wonder why consumer debt is spiking to record levels.

Federal Reserve data released earlier this year shows U.S. consumers are carrying balances totaling more than $1 trillion on their credit cards, up 6.2 percent from a year ago and the highest amount since our time of financial crisis in January 2009. This is in addition to the more than $1 trillion in auto loan debt Americans are saddled with, and student loan debt has nearly tripled in the last decade to over $1.4 trillion.

The bottom line is that too many of us are making the costly mistake of spending too much and not saving enough. That said, it’s highly likely that many of your clients, prospective clients, and even friends and family may have large amounts of debt and little to no savings set aside. And this is where you come in.

“CPAs skilled at organizing financial information and wrestling with the most complex set of laws, regulations, and filing requirements in the world—the Internal Revenue Code (this may only be a slight exaggeration)—have an important role to play in combating our savings and debt crises,” says James Sullivan, CPA, PFS, Illinois CPA Society member and board member of Consumer Debt Counselors Inc.

Sullivan says the need for financial counseling and guidance is unprecedented, and CPAs are the perfect candidates to provide it, both as a public service and as a business development tool. “With an overwhelming need and the right tools, CPAs can take advantage of a growing practice development opportunity by delivering a valuable service to Illinois students and families,” he adds.

As respected business advisors and finance experts, CPAs are perfectly positioned to advance financial literacy and planning in their communities. Are you ready to help make a difference in someone’s financial future?